Setting your Mind Before starting with Online Stock Trading

If I say finance is pretty much a mind game, would you agree? You are financially as fit as you manage the balance between your income and spending. Your future will also depend on how well you manage risk to get higher return of your investment. Saving the money in retirement account or going for an expensive vacation is all about mind game. Similarly buying individual stock vs. buying index fund is also a mind game.

So, when you start with online stock trading, how well you’ll perform depends on how well you play this mind game. Resisting temptation to buy one particular stock, which may be a risky decision, is a difficult mind battle you’ll have to win. One of my biggest financial mistake was to repeatedly invest in a falling stock, which ultimately went for bankruptcy.

I learned my lessons hard, and here’s a my take on how online share trading should be approached by the first time traders/investors.

We get attracted to a particular stock very easily. You read about it in some news paper, you read articles about it in sites like Seeking Alpha, etc and all of a sudden there’s this irresistible urge to buy few shares,just because you read it’s a good company with tremendous potential for growth.

(Related – How to Control Stock Trading Impulses)

It’s easy money for you, and since you have money in your trading account, you place buy order almost immediately to catch the stock while still it’s low.

Sound familiar? 

However, not everyone can be successful in this venture since stock picking and selling require a considerable amount of discipline and strong determination.

I would advice you to at least try out online stock trading, if you are already on a sound financial base. In case you’re in debt or struggling to pay the monthly bills, I would strongly discourage you to do any trading activity.

I am advocating for stock trading because at least this gives you knowledge and experience, when you lose money. The knowledge may come in handy when you start with investing in stocks later on in your life.

(Related – Forex Trading vs Stock Trading – Where to Expect Better Return)

To some experienced day traders, buying and selling task online is surprisingly a very easy task; however, to others, trading stocks in the internet is a cliffhanger.

The rise of online brokerage software tool as well as online brokerage accounts for the stock market has paved way in making stock trading become more understandable, but resulted to some intricacies and some liabilities for home investors.

Her are easy guides to beginner Stock Traders

1) At first, be very frugal with your capital. When you decide to start investing in stocks, of course, you prefer to obtain clear-cut idea of how much amount of capital you’re more than willing to invest into your initial transaction. That amount of money must be in one and accessible place.

2) Carefully consider opening a money market account or an identical alternative. This way, your bank may assist you to establish a high-yield savings account which may function as an initial storage place for your money.

Be reminded that it is very imperative to understand the rules on your MMA or identical account that will secure your money under Federal Insurance laws.

3) Look for an online brokerage.  Look for the ones which suit your particular investment plan of action and your fundamental stock trading requirements.

4) Examine the rules.  There are particular rules on what you can do with your earnings from stock trading whether it is from the internet or anywhere else. You must master the pros and cons of stock investing.

5) Carefully observe the stocks. There are a great number of stocks traded in US exchanges as well as others across the globe. Review how the stocks work but you have to create your own judgment by means of natural research approach where you can discover which one provides the most significance to you.

Do not forget to utilize the financial data and research which your online brokerage have arranged for you for this shall serve as very valuable technical analysis.

6) Master your brokerage account software. By the time you release a specific amount of money to your selected online stock trading service, you shall obtain access to an account with a collection of distinct electronic features which will aid you purchase, sell and monitor your trades.

Make certain that your company has excellent customer service; this way, the staff may assist you in case some complications arise.

7) Set initial business dealing. First, establish some minor test bids, sit back for a while and then observe what happens. Afterwards, you can visualize the correlation among your buys and sells as well as the core values in your account. By then, you shall be more experienced on how stock trading online works.

8) Do not try to time the market. No matter how hard you try you can’t buy a stock at its lowest price and sell at its highest value. You just can’t do it, except when it’s a pure coincidence. Waiting for right price sometimes brings disaster and lost opportunities. Rather, set a price range to buy and sell.

Readers, if you’re in to online stock trading, what other advice you’d like to extend for people who are just learning this skill?